Last week, on October 1, China Unicom (Hong Kong) Limited ((ADR) NYSE: CHU) officially launched its nationwide 3G services in mainland China after almost 5 months of trial operations. Although it is the last of the big three operators to do so behind China Mobile Ltd.’s ((ADR) NYSE: CHL) and China Telecom Corporation Limited ((ADR) NYSE: CHA), the company’s partnership with Apple Inc. (NASDAQ: AAPL) to carry the iPhone may help drive consumers to the new service. China Unicom began taking pre-orders for the iPhone on October 1 with plans to issue the device between October 15 and 30.

China Unicom was granted its license for operating 3G business on January 7 and started trial commercial use of 3G services on May 17.It has already invested RMB22.85 billion at the end of August with plans to spend a total of RMB38.7 billion by the end of the year.

China Unicom’s 3G service runs on the WCDMA 3G network standard which is compatible with the existing iPhone hardware. According to the company its 3G service has the longest track record of commercial usage, is a proven technology, and has the greatest compatibility with existing mobile handsets. China Unicom already covers 285 Chinese cities with its WCDMA networks and plans to be in 335 cities by year end.

According to PC World, China Unicom will offer 5 different versions of the iPhone with eight different 2-year service plans. Although pricing details have not been confirmed the device is expected to be selling for around RMB5,000 (US$732). Actual pricing will be contingent on the cost of an individual owner’s monthly service plan — ranging from RMB126 to RMB886 — with the most expensive one providing the user with any of the iPhone models for free. These packages will include 450MB to 4GB of mobile data access, 120 to 880 SMS messages, 15 to 95 MMS messages, and between 320 to 3,000 minutes of talk time.

According to a press release earlier this week, Alibaba.com Limited (HKG: 1688), China’s leading business-to-business e-commerce platform, announced its acquisition of HiChina Web Solutions, a leading Internet infrastructure service provider. Alibaba has purchased 85% of HiChina’s shares for RMB539.98 (US$79.06) in cash. HiChina’s management will initially retain the remaining 15% of its company’s shares but will have the option to sell them back to Alibaba subject to their meeting certain post-completion performance milestones during 2011 to 2015.

The company outlined four key strategic benefits from this acquisition:

Large customer base: A majority of HiChina’s more than 200,000 customers do not overlap with the existing Alibaba.com customer base, allowing for increased synergy and opportunities across both companies.

New, value-added applications: While Alibaba has been a leading platform for connecting businesses online, HiChina’s applications, which include domain name services, web and server hosting services, email hosting services and website design and development services — will allow the company to offer tools and features to operate and manage online businesses more effectively without leaving the Alibaba.com platform.

Advanced and automated “do it yourself” Web site technology: HiChina’s product offering will become part of Alibaba.com’s Information Technology Business Unit (ITBU), which is focused on providing small businesses with a comprehensive solution to challenges that arise from the implementation of hardware, software and Internet-based services as well as IT maintenance.

A strong management and operating team.

“Our vision is to make it easy for customers to do business anywhere by solving their challenges in procurement, sales, management and financing through technological upgrades, thereby raising their competitiveness and realizing industry advancement.

When we went public, we set on a course to seek investment opportunities to grow our customer base and acquire additional technology and new applications to achieve our vision. HiChina is a strategic fit with that vision. With the support of the seasoned and highly capable executive team at HiChina, I am confident that our complementary businesses will create synergy and expedite our transformation from ‘Meet at Alibaba’ to ‘Work at Alibaba.’”
– David Wei, CEO, Alibaba.com

As we reported earlier this week, unlike the US search market, the Chinese market’s dominant player is Baidu, Inc. ((ADR) NASDAQ: BIDU), not Google Inc. (NASDAQ: GOOG). While we listed some of the reasons that have contributed to Baidu’s success in China, we now want to take a look at the flip side of the issue and highlight one of the areas where Google has an opportunity to make some gains. Like the rest of the world, China is quickly transitioning to a robust mobile ecosystem consisting of smartphones running on broadband 3G networks, which represents a multi-billion dollar market in the not-so-distant future.

According to a Reuters article, China’s mobile search market has an addressable market of more than 600 million mobile subscribers, almost twice as many as the 339 million users that access the Internet from a computer terminal. Of the more than 155 million users currently accessing the Internet through their mobile handsets, close to 26% used mobile search services. While these figures are still negligible, the size of the market potential is huge and mobile Internet access may become the primary access channel for many Chinese.

“For the mobile search market, the number is still small but the growth potential is extremely high. It is an important area.”
– Li Yinan, CTO, Baidu

Following up on Doug’s earlier post, I would like to point out what the Chinese media has deemed to be the bigger story for Sina – the $180MM equity financing. This was quite casually mentioned in Wall Street Journal’s article on the failed acquisition of Focus Media Holding Limited ((ADR) NASDAQ: FMCN) by Sina Corporation ((USA) NASDAQ: SINA). However the Chinese press and blogosphere seems to be having a field day over this (example: check out this special feature by Techweb, in Chinese), calling it Sina’s MBO (management buyout).

The significance in the financing is that Sina’s management now has stronger control over the board, after acquiring a 9.41% stake and becoming the No.1 shareholder (Sina’s poison pill plans prohibit institutional investors from acquiring more than 10%).

“… This should have happened a long time ago, but I never expected it to actually happen. Sina’s shares are extremely diversified, with no controlling shareholder that is responsible for the company’s future. This is why for 9 years since Sina’s public offering, it has always been a great tool for capital market manipulation, but never really anyone’s enterprise. CEOs are changed like a circus show, and the company’s market value is now less than 3/4 of Sohu…

… Now that Sina people are biggest shareholders, for the first time they have the right dream about the company’s future. I like this change.”

Rich Tong, MD of Qiming Venture Partners, shares with the press (link in Chinese) that the move was probably spurred by the likely failure of the Focus Media acquisition, and that he expects Sina to make some pretty big moves in the coming 12 months.

Sina CEO Charles Chao revealed (link in Chinese) that plans for the “MBO” began two months ago, and hints that Sina will focus on growing vertically, for example in its real estate site, video and mobile. Management apparently wants to spin-off these vertical properties – for example a few months ago there was news of Sina’s real estate site merging with E-House, and now it seems there are plans for a US IPO for this JV.

If you’re a fan of micro-blogging service Twitter then you may get a kick out of Japan’s nano-blogging service Chuitter (Japanese only). It takes the already terse limit of 140 letters and shrinks it down to 14. What can you communicate in 14 characters you may wonder? Well since Japanese characters can convey more information than English letters, it sounds like Chuitter users can send very short but completely readable posts such as Haiku poems.

Reported on Asiajin, there is uncertainty whether this service is intended as a serious competitor to Twitter — unlikely — or just a unique home-grown service that the Japanese can call their own. If you visit the site (Japanese) you will notice it looks remarkably similar to Twitter which may be a problem if it becomes a full-fledged business. According to the article, “Many Japanese Twitter users are trying this clone.”

We will keep our eyes on this service to see whether it develops into something more than a novelty. My only question about Chuitter is what advantages does it have over Twitter by being shorter. Presumably Japanese Twitterers are not obligated to send 140 character tweets. How does placing an artificial limit on the service improve people’s experience. I guess it depends on how the limit changes the nature of what is tweeted.

Please let us know if you’re a Twitter user in Japan who has tried the new Chuitter service.